FTSE 100 nudges higher but weak data dents pound

The FTSE 100 posted modest gains on Tuesday, outperforming European and US peers, while weak UK data put sterling under pressure.

The FTSE 100 index closed up 9.90 points, 0.1%, at 9,452.77. The FTSE 250 ended 36.14 points lower, 0.2%, at 22,028.18, and the AIM All-Share dropped 2.91 points, 0.4%, to 789.56.

The UK unemployment rate unexpectedly rose in the three months to August, numbers showed.

According to the Office for National Statistics, the jobless rate was 4.8% in the three months to August, rising from 4.7% in the three months to July.

It had been expected to stay at 4.7%, according to consensus cited by FXStreet.

The ONS said payrolled employees in the UK fell by 93,000 on-year in August alone but did rise by 10,000 on-month.

In the early estimate for September, which the ONS warns is likely to be revised, payrolled employees fell by 100,000 on-year and by 10,000 on-month to 30.3 million.

Annual growth in regular earnings, so excluding bonuses, was 4.7% in the three months to August, easing from 4.8% in the three months to July. The figure landed in line with consensus.

Deutsche Bank’s chief UK economist Sanjay Raja said “one thing is clear, slack continues to build in the labour market”.

“Wage pressures are easing on the back of softening labour market and hiring plans remain stalled,” he added.

“Bottom line, we continue to think that a [fourth quarter 2025] rate cut may be underpriced by markets. We hold on to our view for a December 2025 rate cut.”

Citi said the jobs and wage growth figures add to its conviction that Bank of England meetings in November and December are “live”.

“Inflation data next week will be an important test with an undershoot likely to trigger further repricing towards an additional cut this year,” the broker said.

Elsewhere, a leading policymaker at the Bank of England warned that there is a “rising” risk that the UK economy could see a “more forceful downturn” because of higher borrowing costs.

Alan Taylor, a member of the central bank’s nine-strong Monetary Policy Committee, said there was a small but growing chance that the UK will witness negative growth and “recession dynamics start to kick in”.

He cautioned that it is “increasingly likely” that the UK economy will fall into a “weakened state for a sustained period”, with inflation sliding below target levels.

He said he believes this could lead to “undue damage” to economic activity in the UK.

The pound was quoted lower at 1.3294 US dollars at the time of the London equity market close on Tuesday, compared to 1.3331 US dollars on Monday.

The euro stood at 1.1591 US dollars, higher compared to 1.1569 US dollars. Against the yen, the dollar was trading at 151.83 yen, lower compared to 152.30 yen.

In European equities on Tuesday, the CAC 40 in Paris closed down 0.2%, while the DAX 40 in Frankfurt ended 0.6% lower.

Stocks in New York were down at the time of the London close. The Dow Jones Industrial Average was down 0.2%, the S&P 500 was 0.5% lower, while the Nasdaq Composite declined 0.9%.

Wall Street’s drop came despite strong third quarter results from investment banks JPMorgan, Goldman Sachs and Citi, which all beat market expectations.

Citi climbed 1.2%, but JPMorgan fell 2.0% and Goldman Sachs dropped 2.8%.

JPMorgan chief executive Jamie Dimon cautioned: “There continues to be a heightened degree of uncertainty stemming from complex geopolitical conditions, tariffs and trade uncertainty, elevated asset prices and the risk of sticky inflation.”

The yield on the US 10-year Treasury was quoted at 4.05%, widened from 4.04% at the time of the London equities close on Monday. The yield on the US 30-year Treasury stood at 4.64%, stretched from 4.62%.

On the FTSE 100, easyJet climbed 8.0% as Italian daily Corriere della Sera reported shipping firm Mediterranean Shipping is among those mulling investing, or taking full control of the budget carrier.

MSC is working in tandem with an investment fund, Corriere said, citing three sources familiar with the matter.

EasyJet is “landing on the desks of several individuals” interested in investing in it, Corriere reported.

Bookmaker Entain climbed 1.8% as its US joint venture BetMGM reported a strong third quarter, with first-half momentum continuing and full-year guidance raised.

Owing to the strong performance full-year net revenue guidance for BetMGM was lifted to at least 2.75 billion US dollars from 2.7 billion US dollars, and Ebitda is now anticipated at approximately 200 million US dollars, from at least 150 million US dollars.

But IMI fell 0.9% as RBC Capital Markets lowered to “sector perform” from “outperform”.

The downgrade reflects “valuation, rather than a fundamental change in our view”, RBC analyst Mark Fielding explained, noting IMI is a “high quality” business.

He pointed out IMI shares are up 26% year-to-date while he also feels the firm cannot avoid some impact from wider end market uncertainties.

On the FTSE 250, Mitie jumped 14% as it upgraded operating profit guidance and launched a new £100 million share buyback, following solid first-half revenue growth and continued progress with the integration of its recent Marlowe acquisition.

Housebuilder Bellway firmed 5.3% after announcing a £150 million share buyback and reporting a 21% increase in annual pre-tax profit as revenue climbed 17%.

But Morgan Advanced Materials dropped 6.6% after its second downbeat trading update in three months, warning of increasing uncertainty in European industrial markets.

Gold traded at 4,141.29 US dollars an ounce on Tuesday, up from 4,093.56 US dollars on Monday. Brent oil traded at 61.87 US dollars a barrel, down from 63.40 US dollars late Monday.

The biggest risers on the FTSE 100 were easyJet, up 37.2p at 501.2p, Persimmon, up 30.0p at 1,199.0p, Berkeley Group, up 94.0p at 4,034.0p, Next, up 250.0p at 12,635.0p and Centrica, up 3.15p at 173.0p.

The biggest fallers on the FTSE 100 were Spirax, down 285.0p at 6,645.0p, Anglo American, down 84.0p at 2,915.0p, Croda, down 76.0p at 2,662.0p, Antofagasta, down 69.0p at 2,758.0p and Weir Group, down 54.0p at 2,794.0p.

Wednesday’s global economic diary has inflation data in China overnight, eurozone industrial production figures and the US Beige Book.

Wednesday’s UK corporate calendar has a trading statement from recruiter PageGroup and bingo and casino operator Rank.

Contributed by Alliance News